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We Have Described Elasticity of Demand AND Supply

  • Demand
    • The demand for our good is elastic; even a small increase in price for an instrument or a lesson could significantly decrease the demand for the good or service. For example, people may be willing to pay $15 for a lesson, but if the price for one lesson is raised to $25, less people will want a lesson. The goods and services that this company offers are not necessities.
  • Supply
    • The supply is elastic. If students are willing to pay more for lessons, we would be able to increase our supply by offering more by hiring more teachers. If buyers are willing to pay more for instruments, we would be able to increase our supply of instruments.

Each Person in the Group Has Drawn A Correctly-Labeled Graph

Jenane: (decdemand) (inc demand)
DemandDecrease.jpgDemandIncrease.jpgJohn: (inc supply)
Fullscreen capture 2202015 23005 PM.jpg
Tad: (dec supply)
Fullscreen capture 2202015 22302 PM.jpg

Each Person's Graph is Accompanied by 3 Realistic Explanations From RIPEN & GRENT

  • Jenane
    • Inc Demand
      • Price of instruments, a complement, decreases
      • Price of lessons from Music & Arts, a substitute, decreases
      • Advertising on television encourages more people to learn an instrument
    • Dec Demand
      • The price of instruments for Music & Arts decreases. More people will buy from Music & Arts, which would decrease he demand from Harmonic Studios.
      • the price of music lessons, a complement, increases.
      • Music programs are cut out of schools.
  • John
    • Inc Supply
      • If we find that there are new music programs started in our city, we can expect to sell more and we will produce more [expectations].
      • If we train more people to give instrument lessons, our supply for lessons will increase [technology/trainer].
      • If the wood or metal used to make musical instruments becomes more abundant, we will be able to produce more [resource pries/availability].
  • Tad
    • Dec Supply
      • If we expect to sell less on a week that Music and Arts is having an instrument sale, then our supply will decrease.
      • If our workers go on strike due to unsafe working conditions or a lack of adequate pay, then production would decrease, causing supply to decrease.
      • If one of the musical lessons teachers gets sick and is unable to teach, the supply of musical lessons would decrease.

We Have Correctly Described the Role of Buyers and Sellers in the Market

  • Buyers
    • We need buyers to purchase our products. Without people to take advantage of our products, we can not make profit.
  • Sellers
    • Consumers need us to make the instruments and to offer music lessons. Most people do not possess the skill to craft a musical instrument in their own home.